Here’s a USA Today write-up pushing back against the fantasy that not raising the debt-ceiling would just “force us to live within our means” and not have catastrophic repercussions:

usatoday.com

Although the Treasury Department likely could avoid delaying Social Security checks, the analysis by the Bipartisan Policy Center points up the depth of the cuts that would be needed if the $14.3 trillion debt ceiling isn’t raised.

It shows that in August, the government could not afford to meet 44% of its obligations. Since the $134 billion deficit for that month couldn’t be covered with more borrowing, programs would have to be cut.

If Social Security, Medicare, Medicaid, unemployment benefits, payments to defense contractors and interest payments on Treasury bonds were exempt, that would be all the government could afford for the month. No money for troops or veterans. No tax refunds. No food stamps or welfare. No federal salaries or benefits.

And:

“We should be honest with ourselves what this would be like, and the answer is it would be chaotic,” said Jay Powell, a former top Treasury official in President George H.W. Bush’s administration. “There is no way to avoid really serious pain.”

…

Things wouldn’t improve much as the days pass. The first major interest payment to creditors would be due Aug. 15 — $29 billion, more than the $22 billion due to arrive in revenue.

On that day, Treasury would have to roll over nearly $500 billion in maturing debt — necessitating an auction which, by that time, might have fewer takers than usual. If demand declines, interest rates would rise.

As the center foresees it, the picture would get worse: layoffs and lawsuits. Global market reaction and media glare. A possible downgrade in the U.S. credit rating, perhaps followed by the loss of market access.

The effect on the country, said former Republican senator Pete Domenici of New Mexico, would be “irretrievable.”

This dovetails nicely with a 1 minute video KT posted a little while back, in which Douglas Holtz-Eakin, chief economic policy adviser to Sen. McCain’s 2008 presidential campaign, charts out the actual $ figures and demonstrates why not raising the debt ceiling is would be madness:

Youtube Video